China Shipowners’ Association warns Maersk and MSC: ‘Competition is needed’
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Do we need a new canal?
Andy Lane and Charles Moret from Container Transport International Consultancy on the merits of the Chinese-funded Nicaragua Canal
As controversy and speculation continues to surround the planned Nicaragua Inter-Oceanic Canal, we take a closer look at what this might mean to container shipping if it does in fact go ahead as planned with construction potentially starting later this year.
Canals - Profitable Business
In 2013, Panama Canal earned more than $1.8bn from ship tolls, of which around $1.4bn was the net contribution to the state of Panama, a highly profitable business. Of the total of 12,045 transits recorded in 2013, 26% (3,103) were made by container vessels, contributing a massive 52% of the total ACP revenue.
Liner Network Complexity
A container line’s network is highly complex, with multiple crossing rotations exchanging cargo between each other as they travel end to end in their respective routes. With canal passages being extremely expensive, lines make good use of transhipment points at the ends of canals, where they consolidate volumes to obtain maximum utilisation of the fewest possible ships which they need to transit canals to create their end-to-end products.
Designing a network based on two canals within the same region would mean a quantity of containers requiring an additional transhipment, adding both cost and also time to the product, so ideally a line (or alliance) will use just one.
Liner routes requiring a Central American canal transit
Presently the largest (by volume) is the Asia-US East Coast, followed by Europe-US West Coast trades, and these services will be able to gain some significant sailing distance reductions through using Nicaragua. The more emerging trades of West Coast Latin America to US East Coast and Europe are by contrast better routed through Panama. The vessel size, and thereby costs of the East-West routes o ... More>>